By William Watts
Oil futures ended sharply higher Thursday, buoyed after data a day earlier showed a fall in U.S. crude and gasoline inventories ahead of the start of summer driving season, while the European Union continues to wrangle over a plan to phase out imports of Russian energy in response to the country’s invasion of Ukraine.
West Texas Intermediate crude for July delivery /zigman2/quotes/209723049/delayed CL00 +1.81% /zigman2/quotes/211629951/delayed CL.1 +1.81% rose $3.76, or 3.4%, to end at $114.09 a barrel on the New York Mercantile Exchange.
July Brent , the global benchmark, settled at $117.40 a barrel on ICE Futures Europe, up $3.37, or 3%.
Back on Nymex, June gasoline rose 1.2% to $3.877 a gallon, while June heating oil gained 2.6% to end at $3.968 a gallon.
June natural-gas futures rose 0.7% to $8.908 per million British thermal units.
The Energy Information Administration on Wednesday said U.S. crude inventories fell 1 million barrels last week, as refiners ramped up activity in response to an expected rise in seasonal gasoline demand. Gasoline stocks dropped 500,000 barrels and distillate stocks rose 1.7 million barrels.
Gasoline futures hit all-time highs earlier this month, while U.S. drivers are paying record prices at the pump.
“U.S. drivers are already facing higher prices at the gas pump, and the summer driving season could exacerbate the trends that are already in place. Inventories typically drop through the summer months, and stockpiles of gasoline in the United States are already 8% below seasonal norms,” said Peter McNally, global sector lead for industrials materials and energy at Third Bridge.
“Refiners appear to be responding to the tightness in refined product markets,” wrote analysts at ING. “Refinery utilization increased by 1.4 percentage points to 93.2%, the highest operating rate that we have seen from US refiners since late 2019. These stronger refinery runs and slightly weaker implied gasoline demand over the week led to the more marginal decline in gasoline inventories. US gasoline stocks are likely to remain tight as demand picks up over the driving season.”
Meanwhile, demands by Hungary for funds to upgrade its energy infrastructure remain a hurdle to an agreement by the European Union on bans of imports of Russian crude. European leaders have looked to a month-end summit for a potential breakthrough.
The Energy Information Administration on Thursday said natural gas in storage rose by 80 billion cubic feet last week. Analysts surveyed by S&P Global Commodity Insights had forecast an injection of 87 billion cubic feet.